1) a. Graph investors' long-term expected inflation rate since 2003 by subtracting from the 10-year U.S. Treasury bond yield (FRED code: GS10) the yield on 10-year Treasury Inflation-Protected Securities (FRED code; FII10). Do these market-based inflation expectations appear stable? Did the financial crisis of 2007-2009 affect these expectations?

b. Plot from 1970 (as in Figure 7.7A) the difference between the 10-year Treasury yield (FRED code: GS10) and the 3-month Treasury bill rate (FRED code: TB3MS). How reliably does an inverted yield curve anticipate recessions? How variable is the time between an inversion and the subsequent recession?

c. Using weekly data ending on Fridays, plot from 1994 the VIX volatility index (FRED code: VIXCLS), with its scale on the left axis, and the St. Louis Federal Reserve Bank index of financial stress on the right axis (FRED code: STLFSI). Is the VIX a good indicator of broader financial market volatility? How closely are the two indices related?